Published on: December 8, 2011
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Hi, I’m Kevin Coupe and this is FaceTime with The Content Guy.
The other day I called up Michael Sansolo and he asked what I was doing. (We only talk like three or four times a day.) I told him I was at the bicycle shop, where I was getting my bike fixed. He asked me what was wrong with it, and I told him it was just a flat tire.
Michael said that he actually was proficient at fixing flat bicycle tires, and he scoffed at my having to bring it into a store to get it fixed. “How much did it cost?” he asked.
Ten bucks, I said.
“Y’know, I may know how to fix a flat bike tire, but it is a real pain in the neck. For just ten bucks, I would have the store fix it, too.”
Score one for the technically incompetent Content Guy.
But what this conversation really made me think about was the notion of value.
Think about it. It wasn’t worth it for Michael to fix his own bike tire if it only cost ten bucks for someone else to do it. I didn’t ask him, but it would be interesting to know where he would draw the line - $11? $12? $15? $20? Clearly, he would draw the line in a different place than I would, because he knows how to change one. It would take me forever to do it, and I’d make a mess of it, so I’d probably spend a lot more than $10 to get it done right.
That’s why I belong to AAA. I know how to change a car tire, but they are a lot better at it than I am, and so it is worth the wait for them to come do it - especially these days, when I always have a cellphone and my iPad to keep me company, and there’s usually a Starbucks somewhere nearby. I don’t really do it consciously, but I factor in my time, my lack of expertise, their greater abilities, the cost of a AAA membership, and add it all up...and it always makes sense to call AAA rather than do it myself.
But as I say, other people would make a different calculation and come up with a different answer. We all see value differently.
Now, let’s think about this in terms of another discussion we often have here on MNB - online shopping vs. patronizing brick-and-mortar stores.
This usually comes up in the context of online sales taxes, or some other story, but there are folks out there who will argue that online shopping is inherently wrong because it hurts local merchants and destroys local economies.
But I would argue that there is no objective value difference between shopping at locally owned store and shopping online. Just as I would argue that there is no objective value difference between reading a newspaper online or in print form, or reading a physical book or one on my iPad or Kindle. No objective value difference at all.
There is, however, a subjective value difference - and these are value decisions that consumers make every moment of every day. They choose one over another because of price or convenience or selection or quality ... and even sometimes because they want to support a local merchant. But these are all subjective value judgements, unique to each of us because of our lives and our priorities. Just like deciding who is going to change that tire.
I also would suggest that for brick-and-mortar retailers to effectively compete with online retailers, one of the things they have to do is make very sure they a) understand their own core value equation, and b) know whether it is valued by enough customers in their markets. That means knowing as much as possible about who is shopping in their stores, and what they are buying, and how often, and how they perceive the experience. That’s something that online retailers - think Amazon and Zappos - are very, very good at. The moment you discover that what you value is not so valuable to X percentage of your customer base, that’s time to rethink your core value offering. Because at that moment, there is a disconnect that can be fatal to your business if you don’t address it quickly. (Actually, I think that you have to be so on top of the situation that it never gets to this point, which could in fact be a point of no return.)
It is a mistake to think, as so many brick-and-mortar retailers do, that once e-tailers have to collect sales taxes, all their advantages will go away. I firmly believe that most of the good and great ones have long known that this day is coming, and they are fully prepared for it. They think that any competitive advantage connected to not paying sales tax is relatively small, and they almost certainly believe that they have a more intimate knowledge of what the consumer values than most brick-and-mortar retailers do.
Tires are funny things. If they are inflated to the right pressure, they make the ride go easier. But if not, they actually can work against you. They go flat, and they can really screw up a trip.
Understanding the complicated notion of consumer value - and building businesses that cater to it - is like keeping your tires inflated to the right pressure. You can’t afford to let things go flat.
That’s what is on my mind this Thursday morning. As always, I’d like to hear what is on your mind.
- KC's View: